India overtakes Britain to become the world’s 6th largest economy

Questions are being asked about why the UK is still sending aid to India when India has now overtaken Britain as the world’s sixth largest economy. By the end of 2018, India will have received £130m in aid from the UK taxpayer.

The UK government had previously said that foreign aid to India would stop last year. However, following pressure from Whitehall, this deadline was extended. Latest figures now show that India’s economy is stronger than that of Britain.

While Britain started the year as the fifth largest economy in the world, analysts say it may now have been overtaken by both France and India. While experts had expected that India would overtake Britain in another four years, it has happened much earlier than had been predicted.

America leads

America is still leading the rankings, followed by China, then Japan, Germany and France. Britain’s Brexit vote in June, which has led to widespread uncertainty, along with the associated fall in the value of sterling while India’s industries are booming has led to the switch taking place this year rather than in 2020.

India’s GDP is predicted to increase by 7.6 per cent next year, but Britain’s economy is expected to grow by just 1.1 per cent. However, there is much disagreement about what impact Brexit will have given that Prime Minister Theresa May is giving nothing away when it comes to her strategy for negotiating.

Meanwhile, the Indian Prime Minister Narendra Modi has put in place sweeping economic changes in a bid to reduce the country’s reliance on the black market. The high value 500 and 1,000 rupee bank notes have been abolished.

While other countries have been celebrating their economic success, British Chancellor Philip Hammond has warned of a tough few years ahead. In his Autumn statement, he said that he would not be sticking to targets set by his Chancellor George Osborne to reduce deficits. Instead, he wanted to have the economic freedom to deal with Brexit repercussions.